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Texas factory activity was essentially flat in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, climbed to near zero (-0.8), suggesting output held steady after five months of declines.

Other measures of current manufacturing activity showed mixed movements in August. The capacity utilization index, like the production index, rose to zero after several months in negative territory. The shipments index also edged up, coming in at -3. Sharp declines were seen in measures of demand, however. The new orders index plunged 13 points to -12.5 after rebounding to positive territory last month, and the growth rate of orders index fell from -5.2 to -14.

Perceptions of broader business deteriorated markedly in August. The general business activity index dropped 11 points from -4.6 to -15.8, and the company outlook index also posted a double-digit decline, coming in at -10.3.

Labor market indicators reflected slight employment declines and stable workweek length. The August employment index was negative for a fourth month in a row but edged up to -1.4. Fifteen percent of firms reported net hiring, compared with 16 percent reporting net layoffs. The hours worked index rose from -6.3 to 0.6, with the near-zero reading suggesting no change in workweek length from July.

There was notable downward pressure on prices in August, while upward wage pressure persisted. The raw materials prices index fell to -8 after a zero reading last month and a positive reading in June. The finished goods prices index declined 13 points to -15.7, hitting its lowest level since October 2009, when Texas was working its way out of the latest recession. Meanwhile, the wages and benefits index remained positive and rose slightly to 18.2.

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